Fibroblast-like synoviocytes (FLS) are key players in mediating inflammation and joint destruction in rheumatoid arthritis (RA). There is an increased level of attention to this cell type as the possible target of a new generation of anti-RA therapie, which would be used in combination with immunomodulators to help control disease without increasing immune-suppression. The behavior of FLS is controlled by multiple interconnected signal transduction pathways. Several of these pathways involve reversible phosphorylation of proteins on tyrosine residues, which is the result of the balanced action of protein tyrosine kinases (PTKs) and phosphatases (PTPs). PTKs are well-known to be key mediators of FLS growth and invasiveness, and more recently, they are emerging as promising drug targets for RA. On the other hand, almost no work has been done on the PTPs in FLS. This grant application focuses on a transmembrane PTP called PTPRS. PTPRS is expressed at low or undetectable levels in hematopoietic cells but we find it to be highly expressed in FLS. The extracellular domain of PTPRS binds to proteoglycans in the extracellular matrix and binding to different proteoglycans results in differences in the intracellular functions of the phosphatase. This PTPRS-mediated mechanism of regulation of intracellular signaling by the extracellular matrix is called the proteoglycan switch. We find that the proteoglycan switch regulates in a PTPRS-dependent way the adhesion and invasiveness of FLS. We also find that interfering with the proteoglycan switch in vivo leads to decreased severity of arthritis in a mouse model. Our working hypothesis is that PTPRS is a key regulator of RA FLS destructive behavior. The objectives of this project are to establish PTPRS as a key regulator of extracellular matrix-induced signals in FLS and provide proof of principle that the proteoglycan switch is a drug target for RA. In Aim 1 we will clarify whether PTPRS and the proteoglycan switch affect various aspects of FLS pathophysiology that are relevant to the pathogenesis of RA In Aim 2 we will identify the substrate of PTPRS that is affected by engagement of the proteoglycan switch and look into the signaling pathways controlled by PTPRS in a proteoglycan-dependent way In Aim 3 we will provide proof of principle that targeting PTPRS helps control RA activity in vivo and can be used as a combination therapy with anti-TNF therapy. The results of this project will shed light on the relationship between extracellular matrix composition and intracellular signaling in FLS. The disease-relevant long-term goal is to validate a novel approach to FLS targeted combination therapy for RA.